Cash Planning, Bank Failures, FDIC Insurance and Protecting Assets

With the failure of a few banks over the past few weeks, there is concern about contagion in the banking sector, and questions being asked regarding whether we will see other bank failures.  We can’t predict the future, but we can provide some information on what we see as best practices for clients to protect their individual and business assets.  Bank failures do occur, and we should all mitigate that risk.

Why Not to Worry
When an individual or business puts money in a bank account, they are making a loan to the bank, the bank then goes out and makes loans or buys assets with that money. This is the premise of that age-old classic “It’s a Wonderful Life.”

Deposit Insurance at an FDIC-Insured Bank

  • Individuals are automatically covered by FDIC insurance if they have a bank account at an FDIC-insured bank.
  • FDIC insurance covers products such as savings, checking, money markets, and CDs.
  • The standard insurance amount per the FDIC: “Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category.” A joint account would be insured for up to $500,000. You can check how much coverage an account may have by using the FDIC online calculator:

Cash Recommendations

  1. Do NOT exceed the FDIC-insured amounts at any given bank — this applies to individuals as well as businesses.  Monitor your account balances so as not to exceed the FDIC insurance limits.  Most all banks have various “participation” arrangements where they spread your deposit among other banks so that you never exceed the insurance limits.  If you are frequently near or over the insurance limits, talk to your bank and develop a solution.
  2. Brokerage Account — You or an advisor can set up a brokerage account and invest in US Treasury money markets or Treasury Bill ETFs. That way, it is all government guaranteed no matter what.
  3. Flourish — Your advisor can set up a bank account with Flourish ( because Flourish automatically spreads the assets over multiple banks, so no bank has more than $250,000.

If you have further concerns or questions, we are here to help – give us a call today!